Axie Infinity can't keep its peak, and mistakenly sells goods as a way out

Author: Mu Mu

After blue-chip NFTs such as Pudgy Penguin (fat penguin) and Doodles opened up peripheral businesses, Axie Infinity, the “originator” of Web3 gold games, also began to sell goods.

Recently, Axie launched an online store to commercialize 4,877 NFTs in the game and sell them as dolls, t-shirts, hoodies, cartoon stickers, and more. To boost sales, Axie is also giving away free NFTs of Mystic Axie’s image to the first 5,000 buyers.

How to develop the incremental market is the direction that Web3 brands are currently working towards, and the combination of NFTs and NFT-producing Web3 games with physical objects is becoming one of the ways to expand influence and generate economic benefits.

Unfortunately, after the release of Axie Merchandise, the trading volume and community number of in-game NFTs have not increased significantly, and this Web3 game IP does not seem to have really reached the Web2 crowd. On the contrary, the return of the Axie Classic classic game not only brought activity, but also drove up the price of the game’s token AXS.

It can be seen that if Web3 games want to get out of the trough, they have to return to the game itself.

Can’t sell NFTs to resell dolls

If you know the concept of Web3 gaming or GameFi, then you must have heard of Axie Infinity, which the Chinese-speaking community likes to call “Ah Xie”.

This Q Meng TGC game (trading card game) has been used by millions of Filipinos during the epidemic to supplement their families, and the “Play To Earn” model of playing games to earn money has also become the mainstream mode of Web3 games due to Axie.

Axie Infinity was created by Sky Mavis, and the game has two key features: players buy NFTized in-game characters to do quests, battles, upgrade NFT characters, or earn in-game tokens AXS, and earn revenue by selling AXS or NFTs.

Such a model has even spawned the business of renting game characters, such as gold game clubs, which specialize in renting characters to players to play, and longer-tail derivative applications are staking game NFTs to borrow crypto assets such as USDT, BTC, and ETH.

As a result, Game has the characteristics of Finance, and the concept of GameFi was born.

At its peak in 2021, Axie had a staggering $17.5 million in daily revenue, over 1.5 million daily active users (DAUs), and $300 million in total 30-day revenue for the project, surpassing the profitability of most traditional games.

But Axie didn’t stay at the top for long, and after more than half a year, it began to show sluggish growth, and any marketing campaigns since then haven’t been able to bring it back to the top. Crypto Slam data shows that by the end of November 2023, Axie had only $28,000 in monthly sales. DappRader data shows that the floor price and market cap of Axie Infinity NFTs have also fallen to the bottom.

The floor price and market cap of Axie NFTs are no longer what they used to be

Axie proved that blockchain games can touch millions of DAU, and the next question is how to break through 10 million DAU. Some practitioners believe that this requires Web3 games to infiltrate the influence of players in traditional Web2 games.

At the end of November, Axie began doing just that, launching an online store that sells badges with the project’s logo, Axie character shirts, hats, accessories, Squishmallow style plush toys, $300 figures, and more, with both crypto and fiat payments.

In addition to selling merchandise, Axie also encourages the UGC ecosystem, unlocking the copyright limit of 4,877 NFTs in the Mystic and Origin series, and users who own these NFTs can sell their own designs in the store. Not only that, but they can also use the NFT characters they hold to carry out Axie-themed businesses, such as cafes, restaurants, comics, and other businesses.

In an even stronger move, Axie Infinity has partnered with Philippine ride-hailing app Grab to launch a user points rewards program to open up distribution channels from mainstream Web2 apps. In the Grab App, users can visit Axie’s online store to purchase merchandise.

Axie offers an online store entrance on Grab

In addition, Axie has partnered with game development studios such as Tribes Studio, Bali Games, Directive Games, and Bowled.io to allow some games to be made using Axie IP.

It can be seen that Axie is working hard to open the boundaries of Web3 gaming IP, and wants to strengthen the connection with the Web2 world in more fields, so as to expand the brand’s popularity, eager for the arrival of new traffic.

IP does not work, and game improvement promotes growth

So, has this series of actions by Axie brought new growth to it?

The data shows that since the launch of Axie’s online store, the number of people in the community has not increased significantly, and it is not very attractive to the incremental users of Web2. In fact, of the 11.9 million Axie character NFTs, fewer than 5,000 have been released from commercial restrictions. According to Axie market data, this portion of NFTs accounts for only 0.04% of all Axie NFTs.

Looking at Axie’s dynamics in the past six months, it is not difficult to find that it is the game itself that really brings about the increase in daily activity.

On November 22nd, just before Axie launched on its online store, the game’s classic series, Axie Classic, returned with an upgrade to the experience, including allowing AXP character inheritance, increasing the AXS reward pool, and setting up the ultimate prize, the Mystery Axe. On top of that, Axie has lowered the barrier to entry to the arena and removed the game’s “energy” requirement, allowing players to play without restrictions.

Axie Classic reboot

The revamp of Axie Classic has rekindled the enthusiasm of old players and also attracted the interest of new players. In just a few days, Axie Classic has reached 100,000 weekly active users, and the price of AXS has continued to rise.

Actions based on gameplay improvements are more immediate to Axie’s stat boost than launching NFT physical goods. Axie has tasted the sweetness of this practice before.

On September 6 of this year, Yield Guild Games (YGG) successfully completed the first Axie Infinity-set supermission event on the Ronin network, receiving 112,000 AXS tokens (about $472,000) in rewards. At the time, the excitement also brought a new level of activity to Axie.

All this shows that Web3 game IPs are far from breaking the circle, marketing activities are still stirring up the stock market, and new Web2 users are far more difficult to reach than old Web3 users.

No one denies that IP peripherals can make more people know about the brand, but you have to win the “hot” crown through your own industry first. When it comes to Web3 games, IP isn’t just a nice-to-have, at best, it’s the icing on the cake, and timing is particularly important.

During the golden age of American animation, Mickey Mouse’s IP Club gained 1 million members in less than 4 years, because Disney first used animated stories to successfully break into the audience market with the Mickey Mouse IP, and then brought the IP to comics and video games. By 2010, 40 percent of Disney’s $1 billion in consumer goods revenue came from Mickey merchandise.

The well-known NFT “Bored Ape” illustrates the importance of timing to IP. After seeing the exposure of “Bored Ape” in the Web2 market, Yuga Labs quickly promoted the cooperation between IP and traditional brands, attracting corporate marketing departments including China’s Li Ning, and further promoting the breakthrough of “Bored Ape” IP.

If Axie can launch merchandise stores and expand its brand influence when it first becomes popular, it really has the potential to become an IP that surpasses Web3 games.

Unfortunately, the time is no longer and everything needs to be restarted. Nowadays, what can really make Web3 games sticky is the quality of the game, the gameplay and experience, and even the rate of return, which is more important than a merchandise, as evidenced by the recent Web3 game BigTime.

Crypto KOL@0xJamesXXX believes that “don’t think about IP-based all day long, there are all kinds of so-called equity empowerment”, and he pointed out that the most important thing in any NFT community is “people”, and a project that has community consensus and can generate value has beaten 99% of NFT projects.

IP is not a one-size-fits-all formula, and it puts the challenge in front of Web3 games: whether to build a product that Web3 players are really interested in, or to cater to a new Web2 user in the way of the traditional internet.

Now, Axie has chosen to do both, so the IP will have to wait for the next time the game itself comes out of the loop.